Efficiency, Bond of Association and Exit Patterns in Credit Unions: Australian Evidence

Brown, Rayna; Brown, R. K.; O’Connor, Ian

doi:10.1111/1467-8292.00097

Cited by 32 publications

(37 citation statements)

References 18 publications

(32 reference statements)

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“…Finally, there is the suggestion that structural change in cooperative financial services is essentially restricted to 'friendly' mergers, and that there is a large degree of acquiescence by regulatory authorities in this matter. Furthermore, it is also the case that liquidation of Australian credit unions has been extremely rare, and it is widely understood that the exit of a credit union in financial distress is likely to occur through merger rather than liquidation (Brown et al, 1999).…”

Section: Introductionmentioning

confidence: 99%

Cost efficiency in Australian non‐bank financial institutions: A non‐parametric approach

Worthington

2000

Accounting & Finance

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A two-stage procedure is employed to evaluate non-bank financial institution cost efficiency. In the first stage, data envelopment analysis is used to calculate technical, allocative and cost efficiency indices using a sample of two hundred Australian credit unions. The results indicate that a typical credit union's costs in 1997 were thirty percent above what could be considered efficient on the basis of observed best practice. The major source of overall cost inefficiency would appear to be allocative inefficiency, rather than technical inefficiency. The second stage uses limited dependent variable regression techniques to relate credit union efficiency scores to financial statement information. The results indicate that commercial lending activities, expenditures on information technology and marketing and promotion, the proportion of non-interest income, and association membership are a significant influence on the level of cost efficiency. The results are found to be invariant to alternative model specifications where input prices are first assumed to be different for each credit union and then assumed to be identical across the sample.

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Section: Introductionmentioning

confidence: 99%

Cost efficiency in Australian non‐bank financial institutions: A non‐parametric approach

Worthington

2000

Accounting & Finance

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“…For Australia, Worthington (1998) and Esho (2001) utilise the parametric stochastic frontier approach while Brown et al (1999) uses non-parametric data envelopment analysis (DEA). Worthington (1998) notes that large well capitalised credit unions with small branch networks are more efficient.…”

Section: Efficiency Studiesmentioning

confidence: 99%

Modelling the Performance of Irish Credit Unions, 2002-2010

2012

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This study undertakes a modeling based performance assessment of all Irish credit unions between 2002 and 2010, a particularly turbulent period in their history. The analysis explicitly addresses the current challenges faced by credit unions in that the modeling approach used rewards credit unions for reducing undesirable outputs (impaired loans and investments) as well as for increasing desirable outputs (loans, earning assets and members' funds) and decreasing inputs (labour expenditure, capital expenditure and fund expenses). The main findings are: credit unions are subject to increasing returns to scale; technical regression occurred in the years after 2007; there is significant scope for an improvement in efficiency through expansion of desirable outputs and contraction of undesirable outputs and inputs; and that larger credit unions, that are better capitalised and pay a higher dividend to members are more efficient than their smaller, less capitalised, and lower dividend paying counterparts.

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“…The goal of a credit union is generally not maximizing shareholders' wealth as in the standard theory of the firm, but rather maximizing its members' benefits [22]. The value of information technology in these organizations is realized as benefits other than profit or stock price.…”

Section: The Credit Union Industrymentioning

confidence: 99%

“…DEA is a non-parametric approach that compares each credit union against the most efficient credit unions in the study. This approach has been used extensively to study the efficiency of financial institutions, and many studies have used DEA in the examination of credit union efficiency (for example, [18][19][20][21][22]). …”

Section: Introductionmentioning

confidence: 99%

IT: what's it good for?

Nelson¹,

Nelson²

2003

36th Annual Hawaii International Conference on System Sciences, 2003. Proceedings of The

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Demonstrating the business value of information technology (IT) strategies is a major concern for most organizations. Previous research in this area has yielded mixed results, further confounding the issue. Much of the previous literature has focused on the return on investment in hardware and software as the definition of business value. We take a different approach to the IT business value problem by examining whether organizations that deploy IT with differing strategies enjoy better business value efficiencies. This paper describes an eight-year longitudinal study of a homogeneous set of credit unions to determine if different IT deployment strategies (interactive web site, informational web site, or no web site) result in greater credit union efficiency. Data Envelopment Analysis [1, 2] was used to calculate efficiency scores. Our results indicate that credit unions who use the strategy of interactive web sites have greater overall and asset efficiency than credit unions with informational or no web sites. Credit unions with informational web sites have greater asset efficiency than those without web sites, but do not show a difference in overall efficiency.Our analysis shows no statistical difference in personnel and operational cost efficiencies between the three different groups of credit unions. This result contradicts conventional wisdom that a business benefit of IT is cost reduction.

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Efficiency, Bond of Association and Exit Patterns in Credit Unions: Australian Evidence

Cited by 32 publications

References 18 publications

Cost efficiency in Australian non‐bank financial institutions: A non‐parametric approach

Cost efficiency in Australian non‐bank financial institutions: A non‐parametric approach

Modelling the Performance of Irish Credit Unions, 2002-2010

IT: what's it good for?

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